15/09/2011 (Bloomberg) - Palm oil dropped for a second day to the lowest level in more than a week on concern that a slowing world economy may reduce demand for commodities.

The November-delivery contract on the Malaysia Derivatives Exchange declined as much as 1 percent to 2,989 ringgit ($970) per metric ton, the lowest level since Sept. 6, and was at 3,010 ringgit at 4:23 in Kuala Lumpur. Futures have lost 21 percent this year.

Greek Prime Minister George Papandreou will hold a conference call with German Chancellor Angela Merkel and French President Nicolas Sarkozy today amid increasing speculation that Greece will default. The Manila-based Asian Development Bank cut its 2011 growth forecast for Asia excluding Japan to 7.5 percent from an April estimate of 7.8 percent, according to the Asian Development Outlook 2011 Update report released today.

“Economy-wise, it is not too bright,” Donny Khor, senior vice president for futures and options at OSK Investment Bank Bhd., said by phone from Kuala Lumpur. The bearish news on the global economy has “a negative impact that continues to weigh on commodity prices and vegetable oil prices,” he said.

Palm oil’s loss was also spurred by the “spillover of negative sentiments” from soybean and corn markets, Khor said.

The Department of Agriculture lowered its forecast for U.S. corn consumption by 3 percent from a month earlier on Sept. 12, projecting weaker exports, feed demand and ethanol production. Corn futures for December delivery fell as much as 0.7 percent to $7.1775, extending yesterday’s 3 percent plunge on the Chicago Board of Trade.

Soybean Stockpiles
Global soybean inventories before the 2012 harvest will reach 62.55 million tons, compared with 60.95 million tons estimated in August and 68.82 million tons this year, the USDA said Sept. 12. Farmers in the U.S., the biggest grower and exporter, will harvest 3.085 billion bushels this year, above the 3.032 billion expected in a Bloomberg News survey and up from 3.056 billion estimated in August.

Soybean futures for November delivery on the Chicago Board of Trade fell as much as 1 percent to $13.7725 a bushel. Soybean oil for delivery in December shed as much as 1.1 percent to 57.01 cents a pound.

Malaysia’s palm oil exports in September are expected to slip as buyers such as India and China are awaiting a further decline in prices, Kishore Narne, research head of commodities with AnandRathi Commodities Ltd., said in a report today.

Exports fell 36 percent to 337,038 tons in the first 10 days of September from a month earlier, market surveyor Intertek said on Sept. 10. Shipments fell 36 percent to 389,069 in the same period, Societe Generale de Surveillance said Sept 12.

Palm oil for May delivery on the Dalian Commodity Exchange dropped 1.1 percent to close at 8,820 yuan ($1,379) per ton, while soybean oil for delivery in the same month fell 0.9 percent to 10,228 yuan a ton.